Does CSR reporting indicate strong corporate governance?

Purpose - This study aims to investigate the relationship between companies filing versus those not filing corporate social responsibility (CSR) reports and corporate governance. Design/methodology/approach - The websites of US publicly traded companies were examined for commitment to CSR or sustainability reporting based on the preparation of voluntary reports. This information provided the CSR measure, the key independent variable in this study. The data used to compute discretionary accruals (based on the modified Jones model) were obtained from Compustat. Data on auditor tenure were retrieved from Audit Analytics. The number of members and financial experts on an audit committee were gathered from proxy reports filed with the US Securities and Exchange Commission. Findings - Companies filing CSR reports have higher audit quality, higher audit committee quality, increased auditor tenure and lower auditor dismissal compared to those not filing CSR reports. The findings support stakeholder theory. Research limitations/implications - This study’s utilization of multiple measures of corporate governance provides insight into the robustness of the relationship between CSR reporting and corporate governance. Further, this research uses a different measure of CSR reporting; that is, companies that voluntarily prepared separate CSR reports following or not following the Global Reporting Initiative (GRI) guidelines compared to reports prepared following the GRI guidelines. This approach increases the size and diversity (i.e. industries) of the sample (Kolk, 2003; Waddock and Graves, 1997). Practical implications - The findings suggest that companies engage in CSR reporting to indicate strong corporate governance. Originality/value - This study uses multiple measures of corporate governance to demonstrate the positive relationship between CSR behavior (measured via filing of CSR reports) and corporate governance.